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to vary a PRA-authorised person’s permissions or to impose a requirement

to refuse to authorise a firm, approve an individual to carry out a controlled function, approve an individual for a limited period or subject to conditions (or both), or to object to a change of control (or to approve it subject to conditions)

to direct an unregulated parent undertaking

to investigate a matter under Part XI of FSMA

to impose a penalty, a public censure, a suspension or restriction.

When will the PRA use its powers?

The PRA approach documents set out what we expect of those subject to our regulatory requirements, and how we will deploy our powers.

We have a variety of formal powers available to us under statute, which we can use in the course of supervision if deemed necessary to reduce risks. For example, we may use our power to require information from firms, or commission a report by a third party into specific areas of interest. We may also vary a firm’s permissions to undertake certain regulated activities, which may require a change to the firm’s business model or future strategy.

While we look to firms to cooperate with us to resolve supervisory issues, we will not hesitate to use formal powers where we consider them to be an appropriate means of achieving our desired supervisory outcomes. This means that, in certain cases, we will choose to deploy formal powers at an early stage and not merely as a last resort.

Our preference is to use our powers to address emerging risks. We do, however, have a set of disciplinary powers, including the power to impose financial penalties and publish public censures, for cases where such sanction is an appropriate response to the firm failing to meet our regulatory requirements. The intention in deploying these powers might include sending a clear signal to a firm – and to the regulated community more widely – about the circumstances in which we consider a firm’s behaviour to be unacceptable, and so deterring future misconduct.

Enforcement policies

We are required by FSMA to maintain a number of policies governing the conduct of enforcement investigations, including policies on:

decision-making

imposing penalties, including how we calculate financial penalties

interviews and investigations at the request of overseas regulators.

Outsourcing enforcement investigations

While we may choose to carry out investigations using our own investigation teams, we may instead (or additionally) outsource those investigations (including the gathering and analysis of evidence and interviews of individuals) to third parties, including the Financial Conduct Authority (FCA).

This may mean that, in certain cases, the subject of the investigation, and others, may be contacted by the FCA and/or third parties authorised by us. This will usually take the form of us using our powers under sections 167 to 169 of FSMA to appoint the third party, and/or specified officers or members of staff of that third party, as investigators. We may also appoint members of our own staff as investigators in such cases.

Where we appoint a third party as an investigator, that person will have the full range of powers available to investigators under FSMA.

We will expect the subject of the investigation, and any person in relation to whom the investigator concerned exercises powers under FSMA, to provide the investigator with the same level of co-operation as it would provide us were we investigating the matter.

We will retain control over, and responsibility for, the scope of the investigation, and the third-party investigators will carry the investigation out under our direction.

Where we choose to outsource the conduct of an investigation, we will:

inform the subject of the investigation that we have done so, and to whom the matter has been outsourced

take reasonable steps to ensure that the investigator makes clear when making first contact with the subject of the investigation, or any other person in relation to whom FSMA powers are proposed to be exercised, that the investigation is being carried out on our behalf

ensure that any Notice of Appointment of investigators required under section 170 of FSMA sets out who the investigators are and, if the investigators are individuals, of which organisations they are officers or employees.

As the end product from an outsourced investigation, the investigator provides us with a report setting out what evidence it has uncovered, and to what extent the evidence is indicative that one or more of our regulatory requirements has been breached.

We will then determine what, if any action we propose to take as a result of the investigation, including (but not limited to) the use of our supervisory or enforcement powers.

Our final statements of policy on our decision-making policy and procedure and on aspects of our disciplinary and other enforcement powers are available in our approach to enforcement statements.

Assisting overseas regulators

We recognise that we operate in an international regulatory environment, and value cooperation with our European and international counterparts. In certain circumstances, FSMA allows us to use our powers to investigate and obtain information at the request of an overseas regulator.

any information known to, or in the possession of, the requesting authority that might assist it in identifying either the persons believed to possess the information or documents being sought, or the places where such information may be obtained

whether the requesting authority is content for the fact that it has made the request to be disclosed to persons whom it may need to approach for the information or documents;

any other authority that the requesting authority is aware has an active interest in the subject matter of the request

an indication of the urgency of the request or the desired time period for the reply.

In addition, the request should include:

the laws or regulations that may have been violated and that relate to the subject matter of the request

where a requesting authority is discharging its responsibilities pursuant to European directives or regulations, these directives or regulations should be named.

For investigations, the request should include:

a description of the facts underlying the investigation that are the subject of the request, and why the assistance is sought

an indication of any special precautions that should be taken into account when collecting the information due to investigatory considerations, including the sensitivity of the information

whether the requesting authority is or has been in contact with any other authority or law enforcement agency in its home state in relation to the subject matter of the request.